eCommerce and the Appliance Industry

Creative destruction is a market term coined in the 1940s by Austrian-American economist, Joseph Schumpeter. It postulates that all economic structures will inevitably be razed by the advent of innovation. Global trade is in the midst of a wave of creative destruction, including in the market of appliance retailing. eCommerce is the progenitor of that wave.

There was a time when buying an appliance in the United States was a major ordeal. First, the price of a new appliance represented a considerable percentage of income. Even before money was spent, though, the act of going to buy the appliance was a veritable Japanese tea ceremony. The nuclear family would pile into a sedan, go to a brick and mortar store, and spend the better part of a day comparing different brands. Sometimes, one would need to foster a relationship with a salesperson who steered customers through the myriad of choices. Once a purchase was made with a flourish of harrumphs and handshakes, the appliance was brought home. It wasn't merely an event for the acquiring family. The neighbors, usually peeking from behind drawn curtains, would surmise as to what on earth the Joneses or the Smiths were bringing into their house. This archetypical experience was just how things were done throughout most of the 20th Century. On the doorstep of the 21st Century, everything changed.

The modern internet became commercially available in 1991 and gained in popularity through 1994. It was around this time that small goods like books and music began to be bought and sold online. A skeptical public was still not ready to make more substantial purchases over a medium relatively untested for formal business. Progress in this regard stalled in light of the dot-com bubble burst of 2000. Though the burst did send a shockwave through the global economy, it ended up merely be a temporary culling of more frivolous online initiatives (think Pets.com). The inexorable march into the future of ecommerce progressed.

A bit slow to initially take off, the 2010s saw the purchasing of appliances online steadily increase. A watershed moment occurred in 2016 when consumers spent $4 billion on white good purchases online, a 38 percent increase from 2015. It doesn't appear to be any specific major appliance that elicited this increase, but an overall bump. As consumer confidence in online retailers increased, so too did their comfort with major purchases. Catering to this, retailers and manufacturers tailored their websites to suit the customers' online shopping experience. Consumers could now explore wide ranges of brands, features, and pricing options across a variety of vendors with just a few clicks. No longer were they subjected to a knowledge gap between them and salespeople. Customers felt they could trust their own judgment in making major appliance purchases more independently..

Progress did not come without casualties. Remember the in-person shopping experience of decades past. Brick and mortar stores must bend to the fickle winds of real estate pricing. They must employ salespeople to curry favor with customers. They must sometimes be burdened with illiquid overstock that won't sell. Many venerable enterprises just could not and cannot compete with these insurmountable constraints. In March 2017, HHGregg filed for Chapter 11 bankruptcy and announced the closure of 220 stores, laying off 5000 people. At the time of this writing, Sears/Kmart has announced the planned closure of 150 stores in 40 states. Home Depot, Lowe's, Whirlpool, and Best Buy have all lost a combined $12.5 billion in market capitalization as a direct result of aggressive moves in the major home appliance sector by Amazon. It would seem that a funeral dirge is in the cards for traditional retailers of white goods.

There is a third way and Appliances Connection is forging it. Rather than wincingly choosing a web presence or the more sedate path of a brick and mortar store, we opted to plunge into both with gusto. Already a successful online-only retailer, furnishing clients in the consumer, builder, educational, and governmental markets, we decided to open a 10000 square foot storefront in the burgeoning Bensonhurst neighborhood of Brooklyn, NY. To call it a showroom would be a woefully inadequate misnomer. Most of your pedestrian showrooms just drop out-of-context knickknacks onto a sterile sales floor. Partnering with renowned luminary of kitchen design, Scavolini Cabinetry, we have created life-sized dioramas that bring the finest appliances to life. This is not to say we've shirked attention from what made us such a sought-after retailer. Our web presence is second to none, bringing to bear our vast stock of merchandise to meet our clients' diverse but exacting needs. When wondering if you'd prefer the selection of an online store or the tactile experience of a glorious interactive showroom, ask yourself, "Why choose?"

eCommerce is expanding precipitously. With its proliferation, many appliance retailers are skipping the once natural evolutionary step of a physical location. Currently, one-third of global consumers prefer to make major household purchases via the internet and that proportion is growing steadily. Thus, the familiar landscape of the appliance marketplace is changing rapidly. That said, Appliances Connection poses that it is possible for us to be simultaneously familiar and cutting edge provided that we excel at both. More traditional outlets may be swept away by the overwhelming wave of creative destruction. It is the intent of Appliances Connection to ride this wave into greater prosperity by meeting every facet of your needs, online or in person.